A health reform legal requirement taking effect this month adds pressure to client communication practices - but also gives advisers a chance to add value to their services.
As required under the Patient Protection and Affordable Care Act, the Summary of Benefits and Coverage aims to improve employee communication and understanding of employer-provided health benefits.
The SBC rule requires group health plans and health insurance issuers to distribute an easy-to-understand document that explains health care coverage. It is intended, the government says, to enable consumers to "more easily understand the coverage they already have, and when purchasing new coverage, to make apples-to-apples comparisons of available options."
While the SBC will be produced by insurance companies, industry leaders say proactive advisers will use it to demonstrate their value to clients by ensuring a smooth adoption of the PPACA policy - thus positioning themselves as the go-to person for expertise in the process.
"Because [the SBC] looms large in September, this is a key milestone to say, 'We've got this,'" says Sara S. LaVallee, SVP, employee benefits practice at insurance brokerage William Gallagher Associates in Boston.
The SBC gives brokers an opportunity to develop a communication practice or to develop partnerships with firms that have built one, adds Perry Braun, executive director of Cleveland-based Benefit Advisors Network. "It will allow [brokers] to further advance services to their clients and demonstrate value," he believes. "The brokerage agency of the future is committing to this path where we build administrative and management resources," he adds. "Most successful agencies today have already implemented and brought into fruition many of the classical HR functions, like employee communication."
The intended purpose of the SBC could be compared to that of a food nutritional label, in that it allows employees to make more educated decisions about their health care content, similar to selecting healthier foods to eat, says Ruth Hunt, communications principal at Buck Consultants in Minneapolis.
It's part of the new wave of communication determining how employees understand what their employers offer them.
It's also another way for brokers to encourage their clients' employees to take a closer look at their health plan options.
"So many employers are on autopilot, 'Give us what we had last year.' How many people are so risk-adverse that they are choosing the wrong plan, paying so much more in premiums than if they chose a high-deductible health plan with a Health Savings Account?" Hunt asks.
She sees this as a teachable moment in communicating with employees. "Even the government is encouraging you to take a much closer look," she says. "SBC will [provide] the narrative."
While communication is changing, the actual impact of the SBC will depend on how employers present it. "If they just send out an SBC with no context or explanation, employees will say, 'Great, another piece of paper' and might not look at it," says Kim Buckey, national lead of the compliance and communications practice at Woburn, Mass.-based HighRoads, a benefits technology company. "If the employer takes a step back through modifying the existing benefits strategy, it could help tremendously."
Buckey says that SBC in itself is a great opportunity for employers to look at - and modify - their existing benefits communications strategy and "get some credit for what they are doing. ... There is all this talk in the media about 'Obamacare' and health care reform. Whether the employer wants to take a stand politically or not, they can say, 'We've been providing you with these benefits, we want you to make the right decision and get the most out of this plan. Here are materials that will help you.'"
Yet, Jennifer Benz, founder and chief strategist for employee benefits consultancy Benz Communications in San Francisco, sees the SBC as another redundancy for the majority of brokers and companies that already do a good job of keeping their clients and employees informed.
"It will not be a night-and-day difference for most companies' communication plans," she says. "What is nice about the SBC is it will allow people to compare their coverage to others ... which hasn't been available."
Even with companies properly communicating their benefits plans, many employees are still left lost and confused, Benz says.
"Companies are moving to high-deductible health plans, and by and large, people do not understand how medical plans work, how our system works, they don't want that additional responsibility. So employers have a big job in getting people engaged and having them understand how things work."
To help the employers help their employees, it falls on brokers, she says. "Brokers need to step up. Brokers are in an amazing position to help solve a lot of communication problems for their clients, but by and large they still default to the old method of doing pretty modest communication," Benz says. "I think brokers have a great opportunity to differentiate their value and services to clients through effective communication."
Employers realize too that the broker can help them communicate. In an August Benz Communications survey, 300 human resource and benefits professionals said that, by and large, they are struggling with benefit communication. Only 24% of those surveyed said they met their communication goals last year, with an additional 19% unsure if they did. Those goals included executing a successful annual enrollment (60%), increasing workers' use of preventive care (48%), and increasing 401(k) savings (42%).
But, a large majority referenced their broker and consultant (55%) or a communications consultant (19%) as the person they go to in support for communication and help in knowing what to do and how to do it. Communications consultants came in third at 19%.
While more than half (56%) of respondents reported that communications improved in the past year, nearly half (45%) said they weren't satisfied with their current communications strategy; an additional 28% said they are ambivalent, according to the survey.
That speaks to how important it is for brokers to take that role seriously and give people that service," Benz says. "No one else is doing it, and small and midsize companies can't do it on their own."
The SBC regulations become effective Sept. 23 and, assuming electronic enrollment, employees will need to receive an SBC for all health plan options by the first day of open enrollment. For plans with a Jan. 1 effective date and an enrollment period of Oct. 15 to Nov. 15, eligible participants must receive their SBC by Oct 15, according to a white paper by Benz Communications.
As many employers were not planning on having an SBC or were waiting until after the June Supreme Court ruling to see if the documentation would be required, brokers now have a lot of groundwork to do ahead of this rule, William Gallagher's LaVallee says.
"We are going to really have to prepare our clients for what's coming down the pike," she says. "I was at a client meeting [recently] and they didn't really know about it, and here we are weeks away from the effective date."
To help lay that groundwork, LaVallee says brokers can work with their employees to make sure what is created is correct and makes sense. While the Department of Health and Human Services has created a template for use - which can be found online at dol.gov/ebsa/healthreform - there are still penalties if the information is entered incorrectly.
"I see the SBC as an additional piece of information, not a replacement piece," LaVallee explains. "All the things [brokers] give are going to have to make sense." To help consumers who are often bombarded with forms and paperwork at open enrollment, LaVallee suggests employers, with the help of their adviser, explain the SBC with a sort of how-to guide or roadmap.
Further, brokers need to work with their clients not only during enrollment but also throughout the year, as an SBC is required to be issued during open enrollment, new eligibility, a health care plan change, upon request and for mid-year changes. "Make sure clients are aware of the timeline trigger points," LaVallee says. "The timeline is going to dictate how employers' manage health plans - and that's backwards.
"Another thing we have to make clients aware of is methods of distribution allowed," she adds. "Electronic is allowed but there are specific directions for that. You can show it [in an] online enrollment portal ... but the enrollee has to acknowledge receipt. That raises technology questions: 'What are we going to do if I don't have online enrollment?' Employers are going to have to start asking themselves questions."
There is a lot of confusion about how to present the SBC, Buck's Hunt says. "We are seeing ... lots of questions: paper versus online; translation requirements; and the prominence of the paper copy they send," she says. "Brokers can guide people" on these issues.
One potential positive is that in the first year, the government is operating on a method of "good faith compliance." "As long as you make a good faith effort" with SBCs, no one will be dinged for being out of compliance, explains Harvey Cotton, a partner in the benefits practice of Ropes & Gray LLP in Boston. "The concept of good faith compliance is intended to give all the parties the opportunity to see how all of this is going."
LaVallee sees helping coordinate the SBCs as another way to become a trusted adviser and not a way to increase revenue, which many brokers fear will decline under PPACA's Medical Loss Ratio provision.
"I don't think type of service is a cost for us, it's part of our expertise, any broker would bake that in," she says. "Carriers aren't charging for it. ... It's not a line item for [insurers] and I think brokers will do that. It's part of health care reform, employers had no say in it. It endears us to our clients, but not worthy of a line item charge.
"I know health care reform has hit everyone over our head," she adds. "I know people know about SBCs but employers aren't focused on it. I see it as our job to outline what they have to do and everything we have to do as a third-party entity to help our clients comply."
That involves getting the document ready, as employers expect that, she says. As an employer, "if you don't have a broker or consultant, now is the time to hire one. We tee-up all the communication," she explains.
Five years down the road, HighRoads' Buckey sees employees being more aware of their benefits as a result of changing communication methods. "I almost think they can't avoid it with so much information coming at them," she says. "This emphasizes the need for a strategy because so much information is coming at them, it could be conceived as noise."
To overcome all that "noise," employers and brokers need to establish a solid communication plan for employees to understand what they want to learn more about. The last thing they need to think, Buckey says, is "here's another piece of material."
Government SBC Guidance Answers Industry Questions, Concerns
The Departments of Labor, Treasury, and Health and Human Services jointly issued FAQs addressing the new summary of benefits and coverage requirement under the Patient Protection and Affordable Care Act in March. Although the agencies released final regulations only a few weeks prior, the FAQs provide additional guidance and clarification.
The FAQs contain a good faith compliance standard for the first year that the SBC requirement is applicable. In the FAQs, the agencies state that they "will not impose penalties on plans and issuers that are working diligently and in good faith to provide the required SBC content in an appearance that is consistent with the final regulations."
Highlights of the FAQs include:
1. The agencies recognize that different entities and service providers may have certain information necessary to prepare an SBC, including the coverage examples. The FAQs state that until further guidance is issued, if a group health plan or health insurance provider has entered into a binding contractual arrangement under which another party has assumed responsibility to complete the SBC, provide required information to complete a portion of the SBC or deliver an SBC, then the plan or provider generally will not be subject to enforcement action for failing to provide a timely or complete SBC.
However, the enforcement action will only be avoided provided that: the plan or issuer monitors performance under the contract; any violation of the SBC final regulations is corrected as soon as practicable; and -- if a plan or issuer has knowledge of a violation of the SBC final regulations but lacks the information to correct it -- the plan or issuer communicates with participants and beneficiaries regarding the lapse and begins taking steps as soon as possible to avoid future violations.
2. The following may be combined in a single SBC, as long as its appearance is understandable regarding information about: multiple tiers of coverage (e.g., self-only, employee-plus-one, and family coverage); different cost-sharing selections (e.g., levels of deductibles, copayments, and coinsurance); and add-ons to major medical coverage (e.g., health flexible spending arrangements, health reimbursement arrangements, health savings accounts and wellness programs.)
3. The final regulations require the SBC to be provided in certain circumstances within seven business days. The FAQs clarify that, in the context of the final regulations, the term "provided" means "sent."
4. Group health plans and health insurance issuers are required to provide SBCs to individuals who are COBRA-qualified beneficiaries, as these individuals must be given the same rights to elect different coverage as are provided to similarly situated non-COBRA beneficiaries.
5. The FAQs provide model language for an e-card or postcard for participants and beneficiaries who are eligible but not enrolled in the group health plan to notify them that the SBC is available online. Group health plans and health insurance issuers may tailor the model language as appropriate.
6. If an SBC is sent to an address in a county in which 10% or more of the population is literate in a language other than English, the SBC must include a statement in the applicable language clearly indicating how to access the language services provided by the group health plan or health insurance issuer. Sample language for this statement is available on the model notice of adverse benefit determination, which is available on the DOL's website.
7. The FAQs state that an SBC is not permitted to substitute a cross-reference to a summary plan description or other document for any required content element of the SBC. However, an SBC may include a reference to the SPD.
Kate Bongiovanni is a contributing editor for EBA's sister publication Employee Benefit News and an associate in the tax section of Smith, Gambrell & Russell, LLP. She practices in employee benefits law. She can be reached at firstname.lastname@example.org.
chartBenefits professionals admit struggling to communicate with their employees, but they know that brokers can help them. In a Benz Communications survey where they could select multiple answers, they shared, by percentage, who they turn to for help. Free resources from carriers and administrators Broker or health management consultants Communications consultants
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